BANKS continued to leave the rediscount facility of the Bangko Sentral ng Pilipinas (BSP) untapped in August as there was ample liquidity in the financial system.
The central bank’s peso rediscount window remained untouched last month, the BSP said in a statement on Thursday, marking the 10th straight month that the facility was not used by banks.
In 2022, the rediscount window was only tapped in April, June, and October, with loans reaching P15.3 billion, more than double the P6.12 billion in 2021.
The Exporters’ Dollar and Yen Rediscount Facility (EDYRF) was also untapped in August. The last time an availment was made under the EDYRF was a dollar rediscounting loan in 2016.
The BSP’s rediscount window gives banks access to additional money supply by posting their collectibles from clients as collateral.
In turn, banks can use the cash — denominated in peso, dollar or yen — to extend more loans to their corporate or retail clients and service unexpected withdrawals.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said there were no rediscount loans last month as there was still enough liquidity in the financial system amid easing credit demand.
Outstanding loans of big banks expanded by 7.8% to P10.99 trillion in June from P10.19 trillion a year earlier, BSP data showed. Loan growth was slower than the 9.4% in May and 12.1% in June 2022.
Mr. Ricafort attributed the slower lending growth in recent months to elevated inflation and high interest rates.
Headline inflation quickened to 5.3% in August from 4.7% in July, marking the 17th consecutive month that it surpassed the 2-4% target of the central bank.
Year to date, inflation averaged 6.6%.
“Furthermore, continued double-digit growth in banks’ net income/earnings also added to the capitalization and liquidity of banks,” Mr. Ricafort said.
The banking industry saw its net profit grow by 24.7% to P178.51 billion in the first half from P143.12 billion in the same period in 2022.
Meanwhile, the gross nonperforming loan ratio of the banking industry slipped to 3.42% in June from 3.46% in May and 3.6% a year ago.
“Fundraising or capital-raising activities of some banks also increased their funds/liquidity for lending, investments, and other expansion activities,” Mr. Ricafort said.
“Thus, all of these factors contributed to increased liquidity/funding in the banking system, thereby allowing banks again not to tap the BSP rediscounting facilities, being one of the last options available to them,” he added.
SEPTEMBER RATESMeanwhile, for this month, the applicable rate for peso rediscount loans will be at 7.5036% for those maturing in 90 days and at 7.7572% for those falling due in 91-180 days.
Meanwhile, dollar borrowings will be priced at 7.89910% (1-90 days), 7.94960% (91-180 days) and 7.94960% (181-360 days).
Lastly, yen-denominated loans will have an interest rate of 2.04812% (1-90 days), 2.07000% (91-180 days) and 2.11000% (181-360 days).
“The Peso rediscount rates are based on the BSP Overnight Lending Rate, while the United States Dollar and Japanese Yen rediscount rates are based on the applicable benchmark rates,” the BSP said.
“The applicable spread, as may be determined by the BSP, may change periodically to complement the changes in the BSP’s monetary policy goals and reflect movements in market interest rates,” it added. — K.B. Ta-asan